Guest essay: Credit unions remain safe during the financial crisis

Citizens and businesses of the Cumberland Valley are very fortunate to have numerous local financial institutions with which they may choose to do business.

Truly local financial institutions, those owned by local people and run with local leadership, whose missions are to serve the needs of local citizens and businesses, are a blessing to our community.

Local leadership and investment means we make quicker and sounder decisions based on the needs and welfare of our greater community.

Our priority -- indeed, our reason for existence -- is to provide financial services that specifically address the financial needs of local individuals and businesses.

The year 2008 will be remembered for years to come. The impact of the mortgage crisis has already been far reaching, and the full impact may not be felt for years.

The Emergency Economic Stabilization Act of 2008 provided legislation that people everywhere can embrace.

Credit union and bank deposits throughout the country are federally insured, now up to $250,000 per person through December 31, 2009.

Although the insurance coverage for banks and credit unions alike benefited from the Act, I would like to point out several differences about credit unions that enhance their safety and soundness.

As cooperatives, credit unions are democratically controlled by their members.

Every member is a shareholder with a vote in the operation of the credit union.

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Operating costs are lower in part because board members are trained volunteers.

Not-for-profit credit unions tend to be conservatively run because members manage their own money.

Because the cooperative structure of credit unions does not encourage excessive risk taking, credit unions have a history of conservative lending practices. This conservative approach has positioned credit unions to experience a very low average net loss rate. Nationally, 99 percent of credit union loans are current and paying.

In the aftermath of the Great Depression, American consumers turned to credit unions to help meet their financial services needs. As the economy recovers from the current crisis, credit unions will continue to be there for our members.

We know credit unions cannot be the entire solution to the problems our economy faces, but credit unions remain an important resource to the 90 million credit union members in the United States.

When the 111th Congress convenes next year, regulatory restructuring will be at the top of the agenda.

We expect that credit unions will serve as one of the few models of what went right in the financial services industry when so much else went wrong. In the meantime, credit unions continue to be safe, consumer-friendly financial service providers that offer consumers with alternatives to for-profit financial institutions.

We, at Patriot Federal Credit Union, have not lost faith in our community or in our great country.

And we believe the blessing of sound, local leadership will be the bright sunshine that will lead us out of this economic downturn -- sooner than some may think.

I can assure you that conservative lending practices, favorable rates and a liquidity base primarily comprised of nearly 42,000 member deposits have positioned Patriot Federal Credit Union to remain strong in these volatile times.

We, along with other U.S. credit unions, are still a safe, secure and sound choice as your financial institution.

It is important to all of the locally-owned financial institutions in the area that we make the communities we serve better places to live and work.

We have developed and value many long term relationships with our members/customers. We look forward to providing exceptional service to people of the community for many years to come.

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Peggy J. Bosma-LaMascus is president and CEO of Patriot Federal Credit Union